BEIJING, June 12 Chinese state-run oil trader Zhuhai Zhenrong Corp has entered a one-year supply agreement to buy Iranian South Pars condensate, in its first term contract for the light crude oil with the Middle East supplier, according to industry officials.
Under the deal, the trader will lift two million barrels of condensate a month from the National Iranian Oil Company (NIOC), according to three sources with knowledge of the agreement.
Tough western sanctions since 2012 reduced Iran's oil exports and crippled its economy by choking the flow of petrodollars, but some of those measures were eased in a diplomatic deal last November in return for Tehran curbing its nuclear activities and shipments have been up from last year.
Zhuhai Zhenrong's condensate agreement - equivalent to about 67,000 barrels per day (bpd) and expected to begin later this year - will be parallel to a contract between state Chinese refiner Sinopec Corp and NIOC for 70,000 bpd South Pars oil under a long-term deal.
Zhuhai Zhenrong would supply the Iranian light oil to Dragon Aromatics, an independently-run petrochemicals producer with a 100,000-bpd condensate splitter at its plant in the southeastern city of Zhangzhou.
"The term supply should commence after Dragon's upcoming turnaround," said one official with direct knowledge of the deal.
Dragon Aromatics, whose $3 billion facility includes two 800,000 tonne-per-year paraxylene plants, is due for a maintenance overhaul for three weeks from mid-August, according to another source.
The sources declined to disclose pricing details, but said the Iranian firm would supply the condensate on a delivered basis using NIOC-chartered tankers.
Telephone calls to a Zhuhai Zhenrong spokeswoman for comment on the NIOC deal went unanswered.
Zhuhai Zhenrong, previously an affiliate of China's defence authorities in the 1990s, acts largely as an import agent for Sinopec, Asia's largest refiner.
The trader, which does not have a refinery of its own, has a separate annual crude contract with NIOC to lift 240,000 bpd of oil, mostly to supply Sinopec.
Since last year, Tianjin Zhenrong International Energy Corp, a subsidiary of Zhuhai Zhenrong, has been working as an agent for Dragon Aromatics, after Dragon won a rare import quota for condensate and started operations in Fujian province.
Most of the South Pars condensate supplies shipped to the Dragon plant have until now been on a spot or semi-term basis.
Since the Geneva deal last November, China's Iranian oil imports have gained sharply, with purchases up more than 50 percent on year and averaging around 620,000 bpd during the January-April period. That's above pre-sanctions levels of about 555,000 bpd, official Chinese customs data showed.
Condensate is used to produce naphtha, a feedstock for making petrochemicals such as plastics and synthetic fibres. The customs data treats condensate as a crude and does not provide breakdowns of the separate volumes.
China's growing oil purchases from Iran have accounted for the main portion of Asia's higher imports from the OPEC member since last year's Geneva deal. (Editing by Tom Hogue)